Us-based toy retailer Toy R Us has reported a 3.4% drop in net revenues to $2.6bn for the third quarter ended 27 October 2012.

Comparable figures for the corresponding period of 2011 stood at $2.51bn as comparable store net sales were also down by 4.1% in home market of US while a 4.6% drop was seen in overseas markets.

The decrease in comparable store net sales, along with foreign currency translation impact of $30m has reportedly resulted into poor net revenues.

With a $9m increase in operating earnings in local market, the operating loss remained flat at $75m.

Commenting on the faltering sales Toys R Us chairman and CEO Jerry Storch said that the tough economic challenges in Europe and Japan is continually hurting the company’s operating income in international markets.

"However, we are pleased with the strong momentum from our locations in China and Southeast Asia where positive performance is helping to offset this weakness," added Storch.

The rise in interest expenses due to make-whole premium of $18m has resulted in net loss decline to $105m for the quarter as against a loss of $93m in 2011.

"We are confident that our inventory levels of the must-have toys will provide us with a strong in-stock position in the weeks leading up to Christmas continuing to make Toys R Us the toy destination for families," concluded Storch talking about the retailer’s Christmas plans.